India Regulator Sees Limited Prospect to Revive 3 Wireless Firms

Feb. 18 (Bloomberg) -- India’s telecom regulator said there
are “limited” prospects for reviving as many as three mobile-phone service providers as their equity has been wiped out
because of rising losses.

Earnings before interest, depreciation, taxes and
amortization at two to three companies is negative, Rahul
Khullar, chairman of the Telecom Regulatory Authority of India,
said at an interview today at the Kotak Institutional Equities
investor conference in Mumbai titled “Chasing Growth.”

“It’s no longer possible for many companies to carry on
like this,” Khullar said, without identifying any wireless
service provider. “Small companies will anyway have to exit.
They are bleeding. Turnaround prospects are limited.”

India’s mobile operators have combined debts of $23
billion, according to Cellular Operators Association of India,
an industry lobby, whose members include Bharti Airtel Ltd.,
Vodafone Group Plc’s local unit and Idea Cellular Ltd. The
government is seeking to raise at least 700 billion rupees
($12.9 billion) from the operators through spectrum sales
and a one-time fee by March to help pare the budget deficit.

Mobile-phone companies including Tata Teleservices
Maharashtra Ltd. and Norway’s Telenor ASA lost subscribers after
the Supreme Court canceled 122 licenses in February 2012 saying
that their allocation had flouted rules. Service providers will
have to “pay exponentially higher rates just to start from
scratch if they want to continue,” said Rajan Mathews, director
general of COAI.

“But the people who were going to fold have already
folded,” he said. “Everyone remaining has deep pockets and are
likely in it for the long haul.”

‘Repair Mode’

Companies including Idea and billionaire Anil Ambani’s
Reliance Communications Ltd. have increased call rates though
not enough to cover the mounting cost of owning and operating
mobile airwaves in India, said Mathews.

Reliance Communications had 385.6 billion rupees
of debt as of Dec. 31, while Bharti Airtel had 744.1 billion
rupees on liabilities, according to data compiled by Bloomberg.

Bharti and Vodafone’s local unit, India’s largest
operators, have scaled back on discounts to compensate for
costs. Vodafone India CEO Marten Pieters said the industry
requires actual increases in tariffs for companies to remain
viable.

“This country has seen telecom tariffs fall for 18
years,” Pieters said at the Kotak conference. “The industry is
in repair mode and will see some hikes now.”